United Technologies will spin-off Pratt & Whitney Rocketdyne and the non-aerospace businesses of Hamilton Sundstrand to partly finance a $16.5 billion acquisition of Goodrich Corp.
The spin-offs, including the targeted sale of Clipper Windpower, are expected to generate $3 billion, the Hartford, Connecticut-based parent of Pratt & Whitney, Sikorsky and Hamilton Sundstrand says.
"We are taking the opportunity re-evaluate our porfolio as we enter a transformational stage," says Louis Chenevert, United Technologies chairman and chief executive.
UTC acquired space launch specialist Rocketdyne in 2004 from Boeing and made it a division of Pratt & Whitney.
"It's been a good business but as we sit here today it's really not core," says Gregory Hayes, senior vice president and chief financial offier.
"Growth will be limited at Rocketdyne," he adds. "It's still a national asset. Unfortunately without a national space policy gorwth will be limited for some time to come."
Final bids for Rocketdyne should be delivered within two weeks, Hayes says. The deal is expected to be closed by the end of the year.
The divestiture will help UTC finance the Goodrich acquisition without using a new stock issuance. The financing package also will include $3 billion in cash reserves from UTC and Goodrich, Hayes says.
UTC still expects to close the Goodrich acquisition by mid-year, the company says. Including Goodrich, UTC says earnings per share should range between $5.30 to $5.50, which represents flat or up to 4% growth.
The company also forecasts $61 to $62 billion in revenues this year, a 9% to 11% increase compared to 2011.
UTC wants to divest "non-core businesses" rather than issue stock to finance the Goodrich acquisition.
The company also is buying the Rolls-Royce share of the International Aero Engines (IAE) joint venture, which makes the V2500 turbofan for narrowbody aircraft and the Embraer KC-390.